Woongjin to buy extra Coway shares from GIC to meet holding rules

South Korea’s Woongjin Group will additionally buy Coway Co. shares, worth up to 300 billion won ($265.8 million), from Singapore sovereign wealth fund GIC to enhance its grip on the water and air purifier maker that is set to rejoin the group family this month.

Woongjin ThinkBig, the education service unit of Woongjin Group, said in a disclosure on Monday that it will purchase Coway shares worth up to 300 billion won from GIC in phases by September. While the number of shares it would buy from GIC will vary depending on share price, it will first purchase a 1 percent stake or 738,000 shares in Coway from GIC through over-the-counter trading this month. GIC currently is the second-largest shareholder of Coway with a 7.35 percent stake.

On Tuesday, Woongjin ThinkBig shares closed up 0.81 percent at 3,750 won. Those of Coway ended down 0.76 percent at 91,900 won.

Coway, the pioneer in the Korean water purifier manufacturing and rental industries, is poised to return to its parent Woongjin Group. Woonging ThinkBig in consortium with local private equity firm STIC Investment will complete the purchase of a 22.17 percent stake in Coway from MBK Partners for 1.685 trillion won on Mar 22. Woongjin had to sell its stakes in Coway six years ago to ease group-wide liquidity stress.

Woongjin Group said it has decided to acquire additional stakes in Coway through Woongjin ThinkBig to strengthen its control over the water and air purifier maker. It has to acquire more than 30 percent stakes in Coway to meet holding entity regulations.

Market experts are positive of the synergy of Coway under Woogjin. The water and air purifier maker with annual revenue of 2.5 trillion won outsources its logistics and call center operations. The group is expected to assign such works to its affiliates including book distribution unit Booxen and IT and call center service provider Woongjin.